MGM Resorts International Chief Operating Officer Corey Sanders and Senior Vice President of Corporate Finance Sarah Rogers double-teamed the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum this week. They both met with J.P. Morgan lead analyst Joseph Greff.
With a goal of increasing cash flow, Sanders and Rogers identified their priorities as top-line growth and keeping margins at their current levels. Key to this is the convention market, where MGM sees room for improvement. Business is picking up, but is currently between 80 percent and 85 percent of pre-pandemic levels.
International visitation is also a concern, lagging domestic traffic, although customers from Europe are back in greater numbers than those from Asia. Nor did Sanders and Rogers neglect MGM’s domestic portfolio: “MGM sees cross-marketing opportunities across its regional properties, which should help sustain demand, with management specifically calling out a growing premium customer base across its properties,” Greff reported.
Meanwhile, back on the Las Vegas Strip, “Booking windows are resembling 2019 levels, though at much higher room rates.”
As far as the all-important conventions are concerned, 2023 is anticipated to be “decent,” with the guest mix shifting toward high-priced weekend/leisure room nights amid a deemphasis on weekend groups and convention room nights, plus the impact of renovations at Mandalay Bay.
Another dampening effect on 2023 convention business is that many of the rooms were booked during the pandemic, resulting in lower prices for conventioneers. Next year is expected to be a different story, “given a full convention slate and higher ADR … significantly higher rates.”
On non-Strip fronts, MGM anticipates spending $500 million on a New York state license fee and another $1.5 billion in upgrading the Empire City Yonkers racino to a full-fledged casino-resort. The former would be paid this year, with the rest of the investment spread across 2024 and 2025. (New York Gov. Kathy Hochul hasn’t budgeted for any casino revenues before 2026.)
In MGM’s existing Asian market, Macau, the company anticipates being able to sustain an approximately 15 percent market share “with expansions in tables (post-concession renewal) and marketing programs helping sustain market share above pre-pandemic levels.”
As for the ongoing casino-legalization process in Japan, with which CEO Bill Hornbuckle has expressed some impatience, MGM expects to invest $2 billion, spread across four unspecified years.
Finally, Greff wrote, “The omnichannel strategy with BetMGM includes loyalty programs where points can be exchanged. Future opportunities for integration are clearer in igaming, with [less] opportunity” in online sports betting.
